Abu Dhabi Commercial Bank
Fundamental — what it's worthbottom-up fair value
Built up from a dividend model, an FCFE cash-flow valuation, relative multiples and the value of retained capital — what is it worth?
Is it cheap or expensive right now?
Latest price vs our fair value. A comparison, not a recommendation.
What it's worth — five lenses
Five independent valuation methods, blended into one weighted central fair value.
| Valuation lens | Per share (AED) | Weight |
|---|---|---|
| Dividend discount model — primary | 21.2 | 30% |
| Residual income (multi-period build) | 22.7 | 20% |
| FCFE (equity DCF) | 23.3 | 15% |
| Relative multiples | 15.9 | 20% |
| Normalized through-cycle | 14.3 | 15% |
| Weighted central fair value | 19.7 | +31% vs spot |
The five lenses span AED 14.3 (the through-cycle floor, conservative) to AED 23.3 (the FCFE build, the ceiling); the dividend model alone (AED 21.2) and the excess-return lenses (22.7) already sit well above spot, while the floor marks the cautious read. The NIM path through the CBUAE/Fed easing cycle, whether a ~16% ROE keeps compounding retained capital, and Gulf de-escalation are the swing factors. Full detail is in the study and the open model.
Technical & price structuretrend, momentum, key levels
Trend, momentum and key levels — what is the price doing now?
What the chart says
In plain terms: Abu Dhabi Commercial Bank trades well below our weighted central fair value of AED 19.7 — a roughly 30% gap that is essentially the worth of the capital it keeps reinvesting. On the dividend it pays today (~4.2% yield, ~47% of earnings) the shares are worth about AED 21 on a dividend-discount model; on the value it builds by compounding a ~16% return on equity, the excess-return and cash-flow lenses land at AED 22.7–23.3. It is the UAE’s third-largest bank by assets — a low-cost-deposit franchise earning ~16% on equity against a ~10.6% war-adjusted cost of equity, freshly pre-funded by an AED 6.1bn rights issue. The bull case (~AED 23) is that the mid-teens ROE keeps compounding through the CBUAE/Fed easing cycle and the Gulf de-escalates; the conservative case (~AED 14.3) values the bank on a through-cycle ROE at ~1.45× book — roughly what the market’s ~1.5× book already pays. What moves it near-term is the CBUAE/Fed rate path, the quarterly NIM print, and Gulf geopolitics.
Key levels
Volatility & where the case breaks
| Typical daily moveRoughly how far the price swings in an average day (based on a measure called ATR). Bigger means choppier. | ~1.0% |
Monte Carlo — where could the price go?near-term price paths
50,000 simulated futures — near-term price paths, independent of the fundamental value.
The 5th–95th and 25th–75th percentile bands from the 50,000-path simulation. Static and pre-computed — independent of the fundamental levers above.
The exact percentiles
The 5th / 25th / middle / 75th / 95th outcomesLine up all 50,000 outcomes low to high — these are the values at the 5%, 25%, 50%, 75% and 95% marks., from 50,000 paths.
| Timeframe | Rare low (5%) | 25% | Middle | 75% | Rare high (95%) |
|---|
What drives the odds
50,000 paths, 16 forces: the CBUAE/Fed rate path (the NIM driver), non-oil GDP & diversification credit demand, oil price & fiscal impulse, sector credit growth, dividend/payout signal, foreign (index-inclusion) flows, and momentum/mean-reversion tilt — plus event forces: a quarterly earnings surprise, a CBUAE policy surprise, a dividend declaration surprise, a sovereign rating action, a regulatory fee/levy change, a large corporate credit event, an index rebalance, an oil shock, and a geopolitical/regional event. Details in the methodology.
Peer set & risks
Where Abu Dhabi Commercial Bank sits in its markets
Abu Dhabi Commercial Bank is the UAE’s third-largest bank by assets — a mature, low-rate GCC franchise earning ~16% on equity, well above the ~1.5× book the market pays for it. It screens cheaply against UAE and GCC peers relative to its return. This is a competitive map, not a price table.
| Arena | ADCB's position | Main rivals |
|---|---|---|
| Total assets (UAE banks) | #3 (~AED 0.81tn) | FAB · Emirates NBD |
| Return on equity | ~16% (mid-pack) | vs FAB ~20% RoTE, sector ~14–20% |
| Price to book (spot) | ~1.5× (cheap for the ROE) | FAB ~1.6×, sector ~1.4–1.7× |
| Cost-to-income | ~26% (lean) | FAB ~22%, sector ~26–32% |
| Net interest margin | ~2.5% | sector ~2.4–3.0% |
| Capital (CET1 ratio) | ~13.8% (strong) | sector well-capitalised |
The debate is whether the ~1.5× book the market pays already reflects a fading ROE, or whether Abu Dhabi Commercial Bank keeps compounding at mid-teens — which the excess-return lenses answer yes and the normalized floor more cautiously. Competitive map, not advice.
About this series & how we build these
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Full write-up plus the editable Excel model.
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Edition: 09 Jul 2026. Older editions stay in the Library.